Paying It Forward

Michelle Singletary earned her money-management stripes growing up in the house of her fiscally prudent grandmother, Big Mama. That's why she says her job as the Washington Post's personal-finance writer "isn't just a gig" — it's a core belief that guides her daily life. Her twice-weekly column The Color of Money is syndicated in more than 120 newspapers, and she's the author of several books on money matters. On June 4, Singletary is scheduled to appear in Richmond as a featured guest at the Extraordinary Women's Exchange. For more information, visit
grcc.com
.

Q: When and how did you first become aware of personal finance and saving money?

A: I grew up with my grandmother, and money was always tight. She was a nursing assistant, and she was very good with her money. My grandmother paid all of her bills on time, all the time. But she worried about it. And I remember saying to myself that I wanted to handle my money in a way that I don't have to worry about it. So when I was little, I would just save my money, and I knew if I wanted something I would save up for it. My siblings would actually come to me for money because they knew I had it. I was like a little banker — I would go, "What do you want the money for?" And they would go, "I want to get some ice cream." And I would go, "Nope, I can't give you money. If I'm not going to use my own money to buy ice cream, I'm not going to give it to you to buy ice cream. If you need it for a class trip you're going on, and you need some extra money, then I'll give it to you for the trip."

Q: With interest?

A: No, that's before I realized the beauty of interest. [
Laughs.
] Had I known about interest at that age, I would have charged it. So they were interest-free loans, but there was a due date. And if you didn't pay it back, you got harassed. I would just walk behind them and ask, "Where's my money? Where's my money? Where's my money?" And so they didn't borrow money from me very often. [
Laughs.
]

For me it was never about having enough money to buy stuff. Money meant to me security. Money meant not worrying about paying something. Money meant having choices. It meant that I could live where I wanted and not where I had to live. It meant having a decent car, not the best car but a good car.

Q: You have a book of money mantras. What are the most important ones that come from Big Mama?

A: The first one, which is very racy, is: "If it's on your ass, it's not an asset." When I wanted to use that, I talked to my minister about it, and he said, "Ah, go for it. Shock ‘em." [
Laughs.
] Then, one of my mantras is, "Is this a need or is it a want?" That's the question my grandmother taught me that's in my blood. Every time you go to buy something, you should ask yourself that question. What she was really asking is, how does this push you forward to your goals in life? If you want to pay off your house before you retire, how do these purchases help accomplish that? And if they don't, then you want to reduce them. That one question has saved me a ton of money. Another one, which I actually got from my husband is, "Enough is enough." Again, all of these mantras sound so simple, but the mantra is saying, "Don't you think we already have enough?" If most people just took the time to clean their house before they went shopping, before they decided to buy anything, they'll know what I mean by "Enough is enough."

Q: As an expert in personal finance, do you ever find yourself defying any of the advice that your Big Mama gave to you or that you give to others?

A: All the time. [
Laughs.
] Let me think.
Hmm
, I have, like, 10 Scrabble games. Because I love playing Scrabble, and if they have a new game or something, I'll get it. So that's sort of defying the Michelle rule of "Enough is enough."

Q: Is it maybe that you're a collector?

A: Nah, I'm just a wasteful consumer buying yet another game. [
Laughs.
] And there are couple things that I do. My family goes to church on Sunday, and every single Sunday we go to brunch after church. Now, some people would go, "Oh, that's not a Michelle thing. That's spending money eating out." But we decided we wanted to make Sunday a whole-family experience. We get up faithfully every Sunday — even when we're on vacation, we'll visit another church. And afterwards, we go to brunch. And that's our family time. That's something that we build into our budget. It's not frugal, because we could just go home and eat, but that's a part of our family experience. And we make sure we have the money for it. But! Here is the very-Michelle thing: There are price points. We can only go to certain kinds of restaurants, and the children have a certain amount they can spend on their entrée.

A: Oh, my God, this is such a great story, but it's a horrifying story. I'm obsessed with finding the gas station with the lowest price per gallon. One night I was coming back from the Washington Post, and I was on "E" where the "E" is shaking and it's like, "You need to get some gas!"

I passed all of these stations to get to the cheap gas station, and it was closed because I had been working late. I said, "I definitely have enough gas that I can get some in the morning." The next day I had the day off, and I had my first baby, she was maybe 6 months old. We get in the car, and sure enough, right outside my community, I run out of gas. It's pouring rain, just pouring. And this was right at the point where people had cell phones, but I didn't have a cell phone because I didn't think it was a good expense. [
Laughs.
]

So, no gas, no cell phone and, you know, I'm standing on the side of the road. In the car is my little infant. This nice guy came by, and he had a nice car. He was dressed in a suit, he looked like he was going to work, so I felt comfortable. He said "Ma'am, may I help you?" We were about five blocks from a gas station, and so he said, "I can take you to get some gas and bring you back." So I get into the car with my baby, and I say, "Thank you for stopping. You look like you're on your way to work."

And he said, "No, I'm on my way to see my probation officer." [
Laughs.
] I held my baby tighter, and I started praying. It was fine — in fact, he had to buy the gas can because I didn't have a gas can. He was just very, very nice, and I didn't ask him what he did. And then I called my husband when I got back home, and he said, "Why didn't you stop last night and just get one gallon of gas?" It had never occurred to me to get just enough to get to the cheap gas station in the morning.

Q: What's your best personal finance habit?

A: One thing I decided long ago, and I coined a phrase for it only recently, is that every penny ought to have a purpose. When I earn money, there's a pot that that penny is going to go into. Even if that purpose is entertainment or eating out on Sunday after church. There's a set amount of money that goes into our retirement fund, a set amount of money that goes into the kids' college fund, a set amount of money to pay down our mortgage. So, there's no rampant money sitting in an account or, you know, burning up a hole in my pocket.

Q: You are part of a church ministry that aims to help people improve their personal finances. Do you see a connection between a person's spiritual life and their finances?

A: Absolutely, I believe it to my heart. When I wrote this last book,
The Power to Prosper
, I was on one of my online chats. And a person wrote, "You know I love your book, but I don't like the fact that it's got religion in it. Couldn't you write a book without all that stuff?" And I said, "Absolutely not. That's not the book I wanted to write." I believe there has to be something that helps you get out of financial trouble and for me, for a lot of people, that's spiritual guidance.

I could talk till I'm blue in the face, but if I can show you scripture that tells you [that] you shouldn't be in debt, that reaches some people in a way that I might not be able to just by using secular wisdom. One of my favorite scriptures is in the Gospel According to Matthew, and it says: "Where your treasure is, there your heart will be also." What it says is: You want to know what you value? Look at where you spend your money. Is it on Mastercard or Visa, or do you give to your church? Or do you give to charity? Do you really value a college education for your kid? Then you've got a college fund for them and as much money as possible is going into that. Open your checkbook — you'll see what you value.

Q: You've spoken before about how greed and over-reliance on credit by consumers, companies and government set the stage for our economic crisis. Do you think current political efforts will produce meaningful financial reform in the near future?

A: Meaningful is questionable. Will we have some reform? Yes. The question is: How deep will it go, how strong will it be? I do think the consumer-protection bureau, agency, whatever they're going to call it, is a good idea. The question is: Is it going to have any teeth? I think history shows that a lot of financial reform does work. Does it keep the crooks out completely? No, it doesn't. It doesn't stop fraud — but it does stem it. Without the Community Reinvestment Act, we wouldn't have a curtail in redlining [when lending is denied to people of certain ethnic backgrounds or living in low-income areas]. Without the Fair Debt Collection Practices Act, you'd have more collectors out there who are browbeating people and lying to them to pay their debt. At different times, Congress does have to step in and say, "You guys are not policing yourselves. We have to do it for you."

Q: A recent column of yours made the point that "rent" shouldn't be considered a four-letter word. How do you think people's attitudes about homeownership have changed in light of the mortgage-loan crisis?

A: I believe people's attitudes have changed since the mortgage crisis. We did hear people say that homeownership was important, except I don't think we heard all of the caveats.

Leading up to the crisis, people were getting into homes they couldn't afford with the notion that the price of the house would always go up or their salary would always go up to be able to handle the mortgage. We began to feel as if homeownership had no risks involved. Homeownership still is one of the biggest assets people have, but older generations — our parents and grandparents — had equity in their houses over time. They weren't swapping houses and moving up and getting these crazy mortgages. They stayed in these mortgages, and then 20 or 30 years later they pulled the liquidity out when they were ready to retire and move to a smaller place. I don't want to sound insensitive, but maybe the mortgage crisis was a good thing because it made people realize that homeowner is right when homeownership is right. There's nothing wrong with renting until you're ready to be a homeowner.

I hate it when people say when you're renting you're throwing money away. That's absolutely not true. If you have a roof over your head, you're not throwing money away. And there are a number of ways to increase your net worth. Homeownership is one of them.